Mass. tackles health reform costs
Mass. bills call for move away from fee-for-service
Massachusetts hospitals support the state’s new efforts to transform the way that healthcare is paid for, but are concerned officials may attempt to slow spending too fast and that more regulation that could dampen the innovation already under way.
Six years after passing insurance reform that remains the subject of intense national scrutiny, lawmakers in Massachusetts introduced bills in the House and the Senate that would encourage a move away from a fee-for-service system and align the state’s healthcare cost growth with its gross state product.
The legislation, introduced this month, is similar in many respects.
Both bills would set a healthcare cost growth benchmark within half a percent of the gross state product for the first 14 years, restructure the state’s Division of Health Care Finance & Policy, and require providers and payers to provide detailed information to patients about the price of a medical procedure.
“Our current healthcare system rewards high-volume, expensive care that is not necessarily higher in quality,” Rep. Steven Walsh, a Democrat, said in a news release. “This bill strikes the right balance in controlling our rising healthcare costs while improving the quality of care that our patients receive.”
The Senate bill would set the annual cost growth benchmark at 0.5% more than the projected growth of the gross state product until 2015. The estimated gross state product for 2012 and 2013 is 3.6%.
The benchmark would then be set as equal to the projected growth of the gross state product for the next decade, while the House bill aims to reduce the benchmark to 0.5% below the gross state product’s projected growth starting in 2016.
“We support the idea of setting expenditure trends against total healthcare expense and trying to ratchet those down over a reasonable period of time to be aligned with the state’s gross state product,” said Lynn Nicholas, president and CEO of the Massachusetts Hospital Association. “We do not believe that it is prudent to set a target that is below gross state product in any way.”
Nicholas said it’s too early for the associa- tion to decide which bill it prefers. “There are merits in both,” she said. However, the MHA does support a voluntary transition away from fee-for-service payments as included in the Senate bill, which would require state-funded programs such as the Office of Masshealth to implement new payment methodologies starting in July 2014. The requirement would not extend to private health plans.
The House’s bill, which lawmakers say can bring in $160 billion in savings over the next 15 years, would mandate that statefunded programs transition to alternative payment methodologies by July 2014 and private health plans by January 2015.
An increase in the state’s regulatory authority could serve as a barrier for hospitals as they move forward with other payment initiatives, Nicholas said. “That’s the last thing we need in an environment that’s moving quickly and requires innovation,” she said.
Massachusetts has been a key setting for payment reform initiatives. In 2009, Blue Cross and Blue Shield of Massachusetts launched the Alternative Quality Contract, a program where medical groups receive annual payments along with rewards based on savings and the performance targets that they meet. Partners Healthcare, a 12-hospital system based in Boston, is the largest system in the state based on bed count. It joined the AQC in October and is also one of the state’s five participants in the CMS Pioneer ACO Model program, a disproportionate share of the 32 ACOS participating in the Pioneer program nationally.
“We’re really still in the process of reviewing both the House and Senate bills,” a Partners spokesman said. “At this point, we’re hopeful that the proposals work to build off of some innovations already under way in the marketplace to address the issue of affordability.”
In a report released this month, the state’s Division of Health Care Finance & Policy reported that the state has some of the nation’s highest health insurance premium costs and “premiums and claims expenditures continue to grow faster than inflation, though the growth rate has slowed in recent years.”
The state’s discussion about cost containment has been ongoing, said Alan Weil, executive director of the National Academy for State Health Policy. Gov. Deval Patrick introduced legislation in February 2011 that aimed to control healthcare costs and promote the use of alternative payment methodologies.
“The need for a focused effort at payment reform and cost containment is quite clear for Massachusetts as it is for the rest of the country,” Weil said.
The Senate is expected to begin debating the bill May 15. The House bill, which is in committee, is likely to go to the House floor by June.
Both bills would establish prevention and wellness funds, require the development of websites that would provide patients with price information, update health IT requirements and mandate a 180-day “cooling- off period” in medical- malpractice instances as well as allow providers to apologize to patients.
The healthcare payment bill introduced by Massachusetts House Speaker Robert Deleo, center, will help lower family premiums, lawmakers said.